Looking at ETH's recent performance, it indeed lags behind BTC. Since Ethereum shifted to PoS in 2022, ETH has fallen about 65% relative to BTC, which is somewhat disappointing.

Remember the original ultrasound money narrative? Back then, everyone was saying that through EIP-1559's burn mechanism and the low issuance after the Merge, Ethereum would gradually become a deflationary asset, eventually more scarce than BTC. Sounds very appealing, right?

But the reality is, this ultrasound money promise hasn't truly materialized. After the Merge, ETH's annual supply growth is below BTC's 0.85%, but it's still increasing at about 0.23%. The key issue is that for Ethereum to truly become deflationary, network activity needs to be high enough to burn more ETH. Currently, this condition is weakening.

The most direct sign is the decline in gas fees. In March, the average transaction fee on Ethereum was only $0.21, down 54% from a year ago. The lower the fees, the less ETH is burned. Even more disheartening, a large portion of activity has migrated to Layer 2 networks. The daily average operations on L2 are 926 transactions per second, while on the Ethereum mainnet it's only 22.36. This is good for scalability, but for the ultrasound money theory, it’s like pulling the rug out from under it.

So why do investors favor BTC so much? A very important reason is trust. BTC has a hard cap of 21 million, and its supply is fully predictable. This certainty is very attractive to investors. In contrast, Ethereum’s monetary policy is more flexible and constantly changing, with slow issuance still ongoing. This uncertainty makes people less confident.

This is also reflected in ETF fund flows. As of March, the US spot Bitcoin ETF managed over $91.9 billion, while the Ethereum ETF only had $12.1 billion. The gap is obvious.

Looking at the price performance over the past five years, ETH hasn't shown much brilliance. From 2021 to now, ETH has only just surpassed its previous high of nearly $4,950, then lost momentum. Meanwhile, BTC doubled from its 2021 high to a new peak in 2025. This huge difference shows that simply reducing issuance isn't enough to generate sustained demand growth.

Another issue is the periodic selling by Vitalik and the Ethereum Foundation. Some analysts openly express bearish views on ETH, citing insider selling at high prices. This behavior creates a perception in the market that Ethereum’s core developers seem to be distributing tokens while the price is high, rather than showing long-term confidence. This has a significant negative impact on market sentiment.

Overall, while the ultrasound money concept sounds cool, it faces many practical obstacles. The development of L2 solutions addresses scalability but also weakens the burn conditions on the mainnet. And the investor preference for BTC’s certainty isn’t something that can be changed in the short term.